The legendary US real estate investor and entrepreneur Sam Zell has intimated that Brazil is one of the few markets in the world where there is room for property investment speculation and success in the short term. His comments are backed up by positive economic data emerging from the nation, and by the fact that on the whole, business and foreign direct investment sentiment relating to Brazil is positive.
But rather than just head for the north-eastern coastline and the Natal province in particular and target the strong tourism market, there are more than enough opportunities to be had in Brazil if you align your investment approach with the strong emergence of housing demand in the middle to lower income brackets.
All the big name property developers in Brazil are pushing resorts and projects in and around Natal on the back of the region’s international promotion and the fact that it is to receive a major airport upgrade and become almost instantly more accessible as a result. These facts mean that greater intensity of focus is now placed on Brazil – but if you’re a bit jaded by – or wary of – the so called ‘can’t lose’ opportunities in and around Natal, why not look at alternative pockets of potential in Brazil.
These alternative pockets of potential were promoted heavily at the recent International Madrid Real Estate Exhibition; Brazil as a nation covered more square meters of exhibition space than any other country. There were developers, experts and even government officials from Brazil on hand at the event, proving just how much effort the entire nation is putting into the promotion of its broad attraction and appeal in real estate terms.
Brazil’s economy is strong and strengthening apace, with economic forecasters at the nation’s central bank having recently increased their predictions for economic growth from 4.5% GDP expansion this year to 4.8%. And it is specifically this strength in economic terms that is ensuring growing demand across all sectors of the population for property. However, nowhere is this demand being felt more acutely than in the middle to lower income brackets in the most urbanised areas.
This sector of the population now has freer access to more funds to fuel their rental of real estate – and with continued foreign direct investment pouring in to ensure a greater number of jobs are created across Brazil, housing demands in the most urbanised areas where employment opportunities are greatest are intense.
Any investor wishing to work on Sam Zell’s advice would do well to target this strong and increasingly affluent demand.
In our opinion Bahia is one area of the country where there is likely to be strong investment into property in Brazil among investors in the coming months.
Bahia is rising in appeal among international tourists with year on year tourism growth at between 5 and 8% according to the region’s Secretariat of Tourism. Between 1997 and 2005 the number of arrivals rose from 3.6 million to 5 million and these numbers are continuing to expand. Interestingly however, US and UK arrivals are very low at the moment with most tourists coming from Portugal, Argentina and France.
Clearly there is massive potential here for investors – but Bahia is not just about tourism. It’s the economic engine of the north-eastern region of Brazil, home to the Camacari Complex for example, which is the largest integrated industrial complex in the Southern Hemisphere and a massive employer. Investors looking for commercial property potential in Brazil will find it in Bahia, investors looking for emerging tourism market potential will find it in Bahia and investors looking to go with Zell’s suggestion of targeting the middle to lower income bracket in urbanised areas should find potential in Bahia around Salvador…making it the perfect region of Brazil to be focused on for the future…perhaps.